Top Pentagon research arm DARPA gave a well-connected firm millions of dollars to build a bomb-detector that after years of work was less effective than a coin flip at spotting homemade explosives, as reported by Noah Shachtman and Spencer Ackerman at Wired.

The contracts were given to RedX Defense — a company partially owned by departing DARPA Director Regina Dugan and staffed by members of her family — despite deep internal reservations about the technology involved.

Agency bosses were repeatedly told that investing in RedX was a waste of time — and moved ahead with the contracts anyway. The bottom line, says a second source familiar with RedX’s work: “The technology just didn’t work.”

The relationship between DARPA and RedX formally began on Sept. 30, 2005 when newly founded RedX received a $1.3 million deal for developing a "refined prototype system" for detecting explosives.

DARPA knew of the company because its founder and president Regina Dugan had formerly led explosives-detection work as DARPA program manager and DARPA had sponsored the research that ultimately formed the core of RedX’s sensor.

Dugan signed the contract on behalf of RedX.

In 2007 RedX began marketing its “XPak” bomb-spotter to government groups. But the sensor was too large and clunky for the battlefield so DARPA gave RedX a $200,000 “seedling” contract to shrink the detector and boost its reliability, especially at spotting commercial-grade explosives (like RDX and TNT).

“The false positive rate was extraordinary,” says one person familiar with the results of the seedling program. “And the pathway to get rid of the false positives was not at all clear.” The [DARPA] officials overseeing RedX’s seedling decided to stop working with the company.

On Feb. 19, 2009, RedX secured another contract for $410,000 from DARPA's Defense Sciences Office (DSO). The connection didn't seem to fit — DSO tackles the most difficult foundational questions of basic science while RedX was selling a bomb-spotter for combat — but the idea was that the RedX technology might be better at finding homemade, nitrate-based explosives than it was at spotting commercial-grade bombs.

[Military insiders] say the results of the second seedling weren’t much better than those of the first. “The chemistry did not look good,” according to one of these insiders. “The false positives were still a big deal.”

In July 2009 Dugan was named the director of DARPA. Her father became RedX's CEO and her sister worked as vice president of marketing.

Despite the fact that RedX continued to pursue contracts from an agency now headed by its co-founder and former chief executive, Dugen didn't sell her shares in RedX or forgive the $250,000 loan she gave to the firm.

Dugen did officially recuse herself from any business dealings between the agency and the company but instead of passing contracts that posed a potential conflict of interest to someone higher up in the Pentagon hierarchy (i.e. those removed from conflict), Dugan left the decisions about RedX contracts to her employees (i.e. those that knew of their new boss's connections).

A few weeks after Dugen assumed command of DARPA, RedX submitted a $3.5 million proposal to fund a new miniaturized bomb-spotter. Dugen had prepared the initial presentation of the technology for agency executives.

The proposal ignited a firestorm within the agency, one source familiar with the inspector general’s investigation says. Not only was the company tied to the new director, there were glaring gaps in the proposal — everything from the schedule of experiments to the scientific approach involved. Nevertheless, this source contends, agency deputy director Ken Gabriel told employees to put the RedX proposal at the “top of the list.”

On Jan. 27, 2010, agency employees agreed to give RedX a $400,000 seedling contract from DARPA’s Defense Sciences Office. If it succeeded it could then receive a series of grants paid for by DARPA but administered through the Department of Homeland Security (DHS).

RedX succeeded in shrinking it's bomb-detector to a more manageable size so it received a $1.4 million contract to enter the next phase of the program.

In tests conducted in July of 2011, one military insider recounts, the device had a false positive rate of nearly one in three. It was pretty good at spotting conventional high explosives, picking them up about three times in four. But the gadget’s ability to detect homemade explosives — the kind most prevalent in Afghanistan today — was abysmal: just 47 percent. “That’s less than chance,” the insider says. “You could flip a coin and do better.”

Dugan is leaving the Defense Department for a “senior executive position” at Google.

When she announced it in early March, military spokespeople insisted the move had nothing to do with a Pentagon inspector general’s investigation into why the Defense Department’s top minds gave RedX multiple contracts to pursue a technology that had already proven itself to be ineffective.

That investigation, prompted by the reporting by Wired, is expected to wrap up in a matter of weeks.